Ryan to Transportation committee: Move forward on highway bill without us

Rep. Paul Ryan (R-Wis.) is acknowledging the long odds facing his efforts to tie infrastructure funding with international tax reform, by encouraging the House Transportation Committee to move quickly on a highway bill.

Ryan, the House Ways and Means chairman, and Sen. Charles Schumer (D-N.Y.) have held discussions for weeks over a potential deal that would have something for both parties - long-term and robust funding for highways, and more generous tax rules for multinational corporations.

The two powerful lawmakers had always faced a number of difficult hurdles in striking a deal, including an Oct. 29 deadline on highways and opposition from key Senate Republicans.

But aides to Ryan and Schumer also acknowledged on Friday that they had not bridged significant policy differences in negotiations, most notably over how much to spend on highways.

A Ryan aide called the funding level for highways "a significant issue," but insisted that the Wisconsin Republican and Schumer have made "enough progress" to warrant keeping up negotiations.

House Transportation Chairman Bill Shuster (R-Pa.) has so far waited to move forward with a highway bill as Ryan and Schumer, the likely next Senate Democratic leader, sought a deal.

"That's why - with the deadline for extending the highway program approaching - Chairman Ryan has encouraged Chairman Shuster to move forward with a highway bill that does not assume a contribution from international tax reform," the Ryan aide said.

A Schumer aide added that "there is not yet agreement on the size of the transportation package or changes to the international tax system. Senator Schumer continues to push for a higher level of transportation funding."

Aides said Ryan and Schumer aren't ready to say that a package marrying an infrastructure deal with new rules for multinational corporations can't be struck this month.

But even the two lawmakers' supporters admitted this week that Ryan and Schumer were running out of time to get a deal done in October.

Rep. Kenny Marchant (R-Texas), a Ways and Means member, said Thursday that tax writers needed to make significant progress next week for a deal to materialize. Both the House and the Senate are scheduled to be out of town in the middle of the month, for the week of Columbus Day.

"It would be hard to leave, and go on break, without having a significant handshake," Marchant said on Thursday. "The timeline gets bizarre."

That's in part because Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Finance Chairman Orrin Hatch (R-Utah) have made it clear that they're deeply skeptical about the Ryan-Schumer talks. Rep. Sandy Levin (Mich.), the top Democrat on the House Ways and Means Committee, also said this week that he was less than optimistic.

"At this point, it's the same place it was weeks ago," Levin said.

Once lawmakers return from the Columbus Day break, they'll have less than two weeks before the highway deadline.

McConnell has long downplayed the idea that any sort of tax reform can happen while President Obama is in office, and other Senate Republicans were worried that the deal would amount to a tax increase on businesses to pay for highways.

"You have to ask yourself, can you put through a major tax bill at the last minute?" Hatch asked this week. "And not just a big tax increase that the Democrats will spend? That's naturally what the Republicans are going to worry about."

Hatch and McConnell are instead urging the House to accept the highway bill passed by the Senate, which includes three years worth of funding.

The framework that Ryan and Schumer are seeking would tax the offshore profits held by multinationals, estimated to be in excess of $2 trillion, at far lower than the current 35 percent corporate rate. That would provide enough funding for a full six-year highway deal.

On the tax side, Ryan and Schumer also want to limit how much the U.S. taxes future offshore corporate profits, while also curbing the use of tax havens, and to give a new incentive for profits stemming from innovation.

In recent days, Republicans have started grumbling that Schumer and Democrats are seeking too much highway funding.

"Schumer wants a big number that we just possibly can't get to," Marchant said.

Congress has to act on highways by Oct. 29, but they also have a ready-made escape hatch. Lawmakers put enough funding in the short-term patch they passed this summer to finance projects at least until December. The Transportation Department has said since then that funding could even limp into 2016.

That means that lawmakers could easily latch on to another short-term extension, especially since House members aren't impressed with the Senate's highway bill, either.

Still, Rep. Kevin Brady (R-Texas) said at least GOP lawmakers were tired of playing that game. "House Republicans do not want a short-term patch," he said this week.